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Call for Papers: Thematic Issue WCP

Towards Raising the Economic Relations between Indonesia and Argentina to a Higher Stage

Authors

Abstract

This paper attempts to describe and analyze ways to strengthen and raise to a higher stage the bilateral economic relations between Indonesia and Argentina. The study reveals that current bilateral relations are below their potential and with a relatively low trade intensity. The low trade intensity may be partly due to structural reasons, such as the great geographical distance that causes high transport costs; the language barrier; and the lack of information, interest and interpersonal contacts, amongst others. Argentine protectionist measures and the rise in the trade balance deficit on the Indonesian side are the main current problems in the bilateral trade relations. Based on the TCI estimate, although the exports and imports of both countries tend to be more substitutes, there is still a very significant progress in trade complementarity in recent years. While, for a bilateral free trade scenario including a FTA, the study reveals that in Indonesia and Argentina surpluses of consumption and trade are expected, but a FTA would reduce tariff revenues. Based on the results, it can be concluded that there are many opportunities to further improve exports based on greater comparative advantage. The paper suggests that if countries should reduce protectionist measures, both tariffs and non-tariff barriers (including the current regulation of non-automatic import licenses) and carry out the Indonesia-Mercosur PTA. The study reveals that with the elimination of trade barriers, both countries will obtain greater well-being and the fulfillment of the objectives of both countries to intensify bilateral trade relations.

Author Biography

Sulthon Sjahril Sabaruddin, Ministry of Foreign Affairs of the Republic of Indonesia

Primer Secretario Diplomático Indonesio en la Embajada de la República de Indonesia en Windhoek, Namibia. Doctor en Economía, Universitas Indonesia.

References

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Keywords:

libre comercio bilateral, análisis de equilibrio parcial, ventaja comparativa revelada, bilateral free trade, partial equilibrium analysis, revealed comparative advantage